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Mar 6, 2013
This Nodal Protocol Revision Request (NPRR) revises the frequency of the audit on the ERCOT model from an annual audit to once every three years.
A 3-year audit schedule for model consistency is frequent enough to verify compliance with Section 3.10. The following points should be considered:
1) The 2012 audit required by paragraph (5) of Section 3.10 and performed by the Internal Audit Department demonstrated ERCOT has achieved a high level of consistency in its models subsequent to the planning model process change. There were no significant management action plan items required as a result of the audit.
2) The process for collecting model data and producing models is now mature and no longer changing at the rate it was when Section 3.10 first went into effect. The risk of reverting back to producing inconsistent models is low.
3) ERCOT would like to focus its limited internal audit and other resources in a risk-based manner. Internal Audit, Executive Management, and Enterprise Risk Management have an annual Internal Audit Planning Process that aims to focus internal audit resources on areas of greatest risk for the organization. As the last audit of this area indicated a reduction in risk to the organization, it is appropriate, through a change in the Protocol audit frequency requirement, to allow flexibility to Internal Audit and Management for the scheduling of less frequent audits for this area to align with this risk-based auditing approach.
4) Each of the last two annual audits (2011, 2012) required over 190 hours of work (this figure does not include Internal Audit’s time) at an estimated cost of $10K per audit).
5) Prior to the annual "independent" audit requirement, the Modeling Team performed self-audits efficiently and effectively. Self-audits could be conducted and reported through management during the two years in between the independent audits performed by the Internal Audit Department if the independent audit requirement in Section 3.10 is adjusted to every three years instead of annually. 6) If inconsistency problems begin to arise, a more frequent independent audit schedule can be implemented at any time.